FCA has advised people to refrain from taking important financial advice from social media influencers.
Kim Kardashian has over 250 million followers on Instagram
Photo Credit: Facebook/ Kim Kardashian West
Cryptocurrency is slowly taking over the world and it is not surprising to see Instagram celebrities, or “influencers,” hopping on the bandwagon as well. Kim Kardashian, one of biggest influencers on Instagram, has also joined the list by dropping a sponsored post for a cryptocurrency token. The entrepreneur shared a paid advertisement post for the Ethereum Max on an Instagram Story back in June. Needless to say, the ad managed to grab eyeballs but also raised a few eyebrows, especially with a regulatory body in the United Kingdom.
Following Kardashian's post, UK's Financial Conduct Authority (FCA) warned investors against falling for the “hype” around new cryptocurrency tokens that were backed by celebrities. The body explained that many such tokens could end up being fake. The issue came up during a speech by FCA Chairperson Charles Randell at the Cambridge International Symposium on Economic Crime.
In his speech on Monday, September 6, Randell singled out Kardashian's Instagram Story. While acknowledging that she had disclosed the post to be an advertisement, Randell said, “There is no shortage of stories of people who have lost savings by being lured into the crypto bubble with delusions of quick riches, sometimes after listening to their favourite influencers, ready to betray their fans' trust for a fee.”
Referring to her post, he further said that Kardashian was promoting “a speculative digital token created a month before by unknown developers — one of hundreds of such tokens that fill the crypto-exchanges.”
Randell added, “When she (Kardashian) was recently paid to ask her 250 million Instagram followers to speculate on crypto tokens by ‘joining the Ethereum Max Community,' it may have been the financial promotion with the single biggest audience reach in history.”
The FCA official explained that since such tokens have been around only for a few years it is difficult to predict their behaviour over the course of a financial cycle.
Randell said, “We simply don't know when or how this story will end, but — as with any new speculation — it may not end well.” Randell, however, said that he could not confirm whether the token Kim Kardashian endorsed is a scam or not.
FCA also asked tech giants such as Facebook, Microsoft, Twitter, and TikTok to join Google in not promoting advertisements for financial products that are not cleared by an FCA-authorised firm.
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